2007 ‘08 ‘09 ‘10 ‘11 ‘12 FINANCIAL CRISIS panicpanic GREAT RECESSION “THE NEW NORMAL” N United States, since 2007

Paul Krugman & Robin Wells, Sept. 2010: “If the fundamental problem lay with a crisis of confidence in the banking system, why hasn’t a restoration of banking confidence brought a return to strong economic growth? The likely answer is that banks were only part of the problem.”

Conventional Left Account turning-point of recent U.S. economic history: rise of neoliberalism in early 1980s workers’ share of income, and real pay, declined causing the rate of profit to rebound so the economy could have grown rapidly, if the extra profit had been invested in production

But financialization occurred: profit diverted from productive investment toward financial speculation so slow economic growth rising debt burdens setting stage for financial crisis and Great Recession

Yet I found: the turning-point was the 1970s – before the rise of neoliberalism the rate of profit never recovered from the fall of the late 1970s and early 1980s the rate of accumulation fell because the rate of profit fell, not because profit was diverted from investment in production workers’ share of income has been stable, and their real compensation has risen, during the last 40 years

The 1970s as Turning-Point: Relative Stagnation Since Then 1969: rise in income inequality starts 1969: fall in growth rate of public infrastructure spending starts c. 1970: rise in Treasury and household borrowing (as % of GDP) starts 1971: collapse of Bretton Woods system: leads to rise in price of oil (1973- ) and 3 d World sovereign-debt crisis & defaults/restructurings

c. 1974: start of worldwide fall in GDP growth & fall in growth of US GDP & industrial production c. 1974: start of fall in growth rate of workers’ pay c. 1974: rise in labor-force dropout rate starts 1975: rise in average duration of unemployment starts

rate of rate accum- econ- of ulation omic profit (productive growth investment) gov’t & Fed policies to counteract debt burdens debt crises, burst bubbles generation of profit  productive investment of profit

U.S. Treasury Debt (% of GDP). actual w/out fall in corp. inc. tax rates & ratio of profit to GDP

Rates of Profit, U.S. Corporations, (profits as % of historical cost of fixed assets) net value added – compen- sation before- tax profit

U.S. Multinationals’ Rate of Profit on Foreign Direct Investment, (after-tax profit as % of FDI)

The Rate of Profit & the Rate of Accumulation, ROP ROA

% of After-Tax Profit Re-invested in Production, U.S. Corporations

% of Profit Re-invested in Production, U.S. Corporations net value added – comp. net oper- ating surplus before- tax profits after- tax profits

Current-cost “Rate of Profit,” U.S. Corporations net value added – compensation

Profit Share of U.S. Corporations’ Output, [(net value added – comp.) as % of net value added]

Workers’ Share of U.S. National Income,

Real Compensation, U.S. Private- Industry Workers, % of 1985 level (compensation deflated by PCE price index; figures for Dec. of indicated year)

Growth Rates, Avg. Annual, U.S. Corporations

“share the wealth” struggles face strict limits the wealth has not been there to share the latest crisis has exacerbated this problem struggles to protect & enhance standard of living CAN succeed but they will lower profitability further, making the system even less stable & prone to severe crises and recessions

Prospects full-scale destruction of capital value new boom, or collapse, or revolution more “kicking can down road” —papering over bad debt with more debt continued sluggishness, recurrent crises as debt mounts, U.S. & other gov’ts’ ability to restore confidence declines socialism